The Federal Housing Finance Agency is introducing a one-time principal reduction program, which will give extremely delinquent borrowers the opportunity to avoid foreclosure. Through this program, government-controlled mortgage finance companies, like Fannie Mae and Freddie Mac, will be permitted to decrease loan balances for borrowers with underwater homes. When a home is underwater, more is owed on it than it is currently worth. This relief will be offered to anyone who meets the set criteria, which includes many Floridians.
In order to be eligible for this program, the homeowner’s outstanding principal balance must not exceed $250,000. Additionally, they’ll need to have been delinquent on the mortgage for over 90 days. Both of these stipulations need to have been met by March 1, 2016 for the borrower to qualify for the principal reduction program.
Principal reduction modifications had yet to be offered to struggling borrowers until now, and it is worth noting that the program will produce other positive results. For qualifying homeowners, the benefit is clear: they’re given the opportunity for a last-ditch effort to stay in their homes. It also serves to boost the economy, by aiding in the repair of the housing market. This program will advance the healing of the market, by allowing borrowers to see their homes out of the negative equity plaguing them now. As a result, a much-needed drop will be seen in the country’s substantial amount of underwater homes.
In other good news, the FHFA also revealed it will be making changes to the rules regarding sales of defaulted loans. These new rules also serve to reduce the risk of foreclosure by requiring buyers of non-performing loans to evaluate borrowers for forgiveness and modifications. Additionally, the rules forbid the buyers from walking away from the home, an act which contributes to neighborhood blight.
For many Floridians, this program is essentially a dream come true. However, when dealing with any pre-foreclosure situation, it’s advisable to seek out the expertise of an attorney before making any decisions. If you are interested in learning about your options, contact a Miami foreclosure attorney at Graham Legal today.